Escalation of the European sovereign credit crisis into the core of the Eurozone poses numerous threats, implicitly and explicitly, to insurer security. In recent years, the sector has proven itself largely resilient to the exceptional stress experienced within the financial system throughout the previous credit crisis. Although the impact of the Euro debt crisis will inevitably impact insurer solvency to some extent, the consensus from market commentators, including the rating agencies, is that insurer financial strength will remain fundamentally resilient, although as a result of recent sovereign actions on December 9, Standard and Poor’s (“S&P”) has placed 15 European insurance
groups on CreditWatch Negative. Through this paper, Willis considers and discusses the key impacts on insurer solvency, acknowledging the currently indeterminate impact of contagion risk as the Euro debt crisis continues to evolve almost on a daily basis.
Willis Market Security is closely monitoring the Eurozone situation as well as the implications on individual carrier groups. Willis Market Security provides the information contained in this report in the context of client assessment of insurance carriers only and such information should not be construed as investment advice.